How Might Courts Interpret the Great Lakes Compact?

When a coalition of environmental advocacy groups challenged the state of Wisconsin’s approval under the Great Lakes Compact of an out-of-basin water diversion to supply the Foxconn project, it came as no surprise to Peter Annin. “It’s not unexpected at all that there would eventually be legal challenges over the Great Lakes Compact,” Annin, the well-known Great Lakes journalist and author, said during an appearance last October at the Law School’s Lubar Center. Like any other legal text, the Compact includes ambiguous terminology. For example, the Foxconn challenge centered on whether the application satisfied the Compact’s requirement that any out-of-basin diversion be for “public water supply purposes.” Annin predicted that the Compact’s meaning will be “refined” during such litigation, much as has happened with other important environmental laws such as the Clean Water Act or Clean Air Act.

The Foxconn challenge made history as the first state-level legal challenge based on the Great Lakes Compact; an earlier objection to the Waukesha approval was heard by the Compact Council itself. The Foxconn case never made it all the way to court, however; it ended with an administrative ruling by Wisconsin Administrative Law Judge Brian K. Hayes upholding the diversion approval. The plaintiffs decided not to appeal the decision. As I explained in a previous post, the context of the “public water supply purposes” language admitted of two possible interpretations: that the proposed diversion would be used for “public water supply purposes,” or that the system requesting the diversion, taken as a whole, served “public water supply purposes.” ALJ Hayes adopted the latter, vindicating the position of the Wisconsin Department of Natural Resources. That decision—predicated on a textual analysis of the statute—is the primary takeaway from the case, and certainly important in its own right.

But other features of ALJ Hayes’ decision have been overlooked, and provide important clues about how future courts will interpret the Compact.

First, ALJ Hayes gave no deference to the Department’s statutory interpretation of the term “public water supply purposes.” Instead, he adopted a de novo standard of review. Deference to such agency interpretations of statutes has been a longstanding—though much maligned—principle of federal law under the Chevron doctrine, although the Wisconsin Supreme Court recently abolished it at the state level in the landmark Tetra Tech decision. Citing Tetra Tech, ALJ Hayes concluded that because the Foxconn matter presented a question of statutory interpretation, it necessarily involved “a question of law which courts decide de novo.”

Second, ALJ Hayes decided the case based on the Wisconsin statutes implementing the Compact, not on the provisions of the Compact itself. In fact, he wrote, “this is not a case interpreting the Compact. It is a challenge to the interpretation of the statutes that were drafted to implement the Compact . . . .” In most respects, those two texts are identical (but not in all; for example, the Wisconsin statutes include a provision specifically disavowing the possibility that the Compact provides any increased or different rights under the public trust doctrine.) Each party state passed laws implementing the Compact, resulting in minor variances from state to state. These differences may play a role in future Compact litigation. It also likely means that courts will import state procedural rules such as, for example, Wisconsin’s time limits to seek further administrative review within 20 days or judicial review within 30 days of an adverse administrative decision. This is unsurprising given the Compact’s bare-bones summary of dispute resolution procedures. (In December 2018, the Council adopted more detailed “Rules of Practice and Procedure” for proceedings directly before it.)

Third, ALJ Hayes examined the policy consequences of the decision. He cited a Wisconsin Legislative Council 2006 analysis that in Wisconsin, “there are relatively few straddling communities, around 7 percent of the total jurisdictions . . .” and “most of the straddling communities lie well outside the feasibility of connecting to a public utility.” Empirical data have been in somewhat short supply during competing claims that allowing a particular diversion will “open the floodgates” to many more, or on the other side, that the surrounding circumstances are so unique that they will never arise again. The subject was so important to the discussions surrounding Waukesha’s application that the Compact Council’s final decision includes an entire section titled “Precedent-Setting Impacts” concluding in part that “the findings in this Final Decision are unique to this Applicant and Application and do not necessarily apply to any other applicant or application.”

These three overlooked aspects of ALJ Hayes’ decision may provide valuable information about how future courts and administrative decision-makers will handle challenges to be adjudicated under the Compact and its implementing legislation.

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